Daily Morning Report

Tuesday, October 1–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were mixed to mostly weaker overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. A Jewish holiday and China markets closed for a holiday today are making for a bit more subdued trading conditions.

Violence in Hong Kong has escalated on Tuesday, a national holiday in China. Reports said a protester was shot with a live round of ammunition amid the escalating civil unrest. This news has not had a major impact on world markets—at least not yet.

In other overnight news, the Euro zone manufacturing purchasing managers index (PMI) fell to its lowest level in seven years, at 45.6 in September from 47.0 in August. The German manufacturing PMI was even worse in September, at 41.7. A reading below 50.0 suggests contraction in the sector. The Euro currency continues to slump against the U.S. dollar.

Australia’s central bank on Tuesday cut its interest rate by 0.25%, to 0.75%.

The World Trade Organization said Tuesday global economies are set for their weakest trade growth rate in 2019 since the major financial crisis over ten years ago. The WTO said global trade will slow to 1.2% this year from a 3% growth rate in 2018. The WTO blamed the trade war between the U.S. and China for the slowdown in trade.

The U.S. dollar index is firmer and hit another contract high overnight. Look for the greenback to continue to appreciate for at least the near term. Meantime, Nymex crude oil prices are higher and trading around $54.50 a barrel.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales report, the U.S. manufacturing purchasing managers index (PMI), the ISM manufacturing report on business, construction spending, the global manufacturing PMI, and domestic auto industry sales.

–Jim

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Monday, September 30–Jim Wyckoff’s Morning Markets Report

Asian stocks were mixed to mostly weaker, while European stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins.

Today is the last trading day of the month and of the quarter, which makes it an extra important day from a technical perspective.

There is a bit less risk aversion in the marketplace Monday, following markets being roiled last Friday by reports the U.S. was considering limiting U.S. investors’ investment in China, including the U.S. stock exchanges de-listing Chinese companies. Weekend reports then said the Trump administration is not considering such moves.

Asian stock markets saw some selling pressure after the 17th weekend in a row of demonstrations in Hong Kong. This past weekend is being called the worst, with many arrests after protestors bombarded police with everything from bricks to firebombs.

China’s economy got some slightly upbeat news Monday, as the official manufacturing purchasing managers index rose to 49.8 in September from 49.5 in August. It was the fifth month in a row with a reading below 50.0, which suggests contraction in the sector. The September PMI report did come in slightly above market expectations.

In other overnight news, the Euro zone jobless rate in August was reported at 7.4% versus 7.5% in July. The August rate was the lowest in 11 years.

Nymex crude oil prices are lower and trading around $55.25 a barrel. Meantime, the U.S. dollar index is higher early today.

U.S. economic data due for release Monday includes the international investment position, the ISM Chicago business survey, and the Texas manufacturing survey.

–Jim

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The December e-mini stock index futures have backed down a bit after challenging the summertime contract high earlier in September. The fact that prices have backed down in late September now makes those recent highs even stronger overhead technical resistance for the bulls to overcome. More selling pressure in the near term would begin to suggest the stock indexes have put in at least near-term market tops. Stay tuned!–Jim

Friday, September 27–Jim Wyckoff’s Morning Markets Report

Asian stocks were mostly weaker, while European stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins.

Slowing global economic growth is in focus late this week. China reported its industrial profits dropped 2% in August, year-on-year. Producer price deflation also deepened in August. Other economic data released from the world’s second-largest economy Friday also showed China’s imports of raw commodities generally declining. The U.S.-China trade war has significantly crimped China’s economic growth.

Meantime, there was more dour economic news coming out of the European Union. The Euro zone September consumer confidence index was reported at minus 6.5 from minus 7.1 in August. Industrial confidence was reported at minus 8.8 in September from minus 5.8 in August.

The world marketplace is seeing risk appetite somewhat blunted by the U.S. House of Representatives considering impeaching President Trump. Whether Trump actually gets impeached seems unlikely at this time. However, the inquiry by the House is very likely to bog down the U.S. government to a standstill on new legislation, and is likely to hurt Trump’s foreign policy agenda.

Nymex crude oil prices are near steady and trading around $56.50 a barrel. The other key outside market today sees the U.S. dollar index trading modestly up and hitting a new high for the year.

U.S. economic data due for release Friday includes personal income and outlays, durable goods orders and the University of Michigan consumer sentiment survey.

–Jim

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Thursday, September 26–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. The up-and-down U.S.-China trade rhetoric is presently in “up” mode following positive comments on the matter from President Trump on Wednesday. Then on Thursday China’s Commerce Ministry said Chinese companies will buy “sizeable amounts” of U.S. soybeans and pork ahead of high-level trade discussions scheduled to take place in October.

However, the positive news on the world trade front is being blunted by the U.S. House of Representatives considering impeaching Trump over what the House says are illegal comments Trump made to a Ukrainian official. The Trump administration on Wednesday released the transcript of his comments to the official, which is being spun by both Republicans and Democrats to each’s favor. Whether Trump actually gets impeached seems unlikely at this time. However, the inquiry by the House is very likely to bog down the U.S. government to a standstill on new legislation, and is likely to hurt Trump’s foreign policy agenda, including trade negotiations with China.

Upbeat economic data coming out of Germany is also assuaging European investors late this week. A consumer sentiment report Thursday showed a higher reading in October than in September, and the October number was also higher than expected. Recent economic data coming out of Germany had been dour.

Nymex crude oil prices are slightly up and trading around $56.60 a barrel. The other key outside market today sees the U.S. dollar index trading slightly higher and not far below the high for the year.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the third estimate of second-quarter gross domestic product, revised corporate profits, the advance economic indicators report, the Kansas City Fed manufacturing survey, and pending home sales.

–Jim

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The U.S. Treasury market bulls have made a solid recovery the past week, following recent selling pressure. Look for more upside price action in U.S. Treasury bond and note futures in the near term. Reason: It appears the political turbulence in the U.S. has significantly increased this week, following the U.S. House’s inquiry regarding impeaching President Trump, and after Trump’s harsh rhetoric in a speech to the United Nations on Tuesday. Stay tuned!–Jim